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Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S1

Page 1 of 2

Witness: BOLDT John

Rogers Communications Interrogatory #S1 1

2

Issue: 3

Issue 54: Are the proposed specific service charges for miscellaneous services over the 2018 – 4

2022 period reasonable? 5

6

Reference: 7

Ex H1 - Joint Use Charges (31-Mar-2017) 8

Ex H1 - Joint Use Charges (07-Jun-2017) 9

Pole Rate Calculations (28-May-2018) 10

Pole Rate Work Form 11

EB-2015-0141 Decision 12

13

Interrogatory: 14

1. We have inserted the values provided by Hydro One throughout this proceeding in the 15

following table. Please confirm the values shown and complete the table by filling in the 16

missing values. 17

18

EB-2015-

0141

Decision

Ex H1 - Joint

Use Charges

(31-Mar-2017)

Ex H1 - Joint

Use Charges

(07-Jun-2017)

Pole Rate

Calculations

(28-May-2018)

Pole Rate

Calculations

(28-May-2018)

2014

actuals 2015 actuals 2016 actuals

2017

actuals

2018

forecast

DIRECT COSTS

Admin Costs $0.90 $ 0.92 $ 0.93 $1.59

Loss in productivity $3.09 $ 3.15 $ 3.18 $3.20

Total Direct Costs $3.99 $ 4.07 $ 4.11 $4.79

INDIRECT COSTS

Net embedded cost $944.49 $1,058.06 $1,178.33 $1,237.22 $1,290.58

Depreciation rate

1.82% 1.82%

Pre-tax carrying cost 8.49% 7.87% 7.79%

7.49%

Depreciation cost $23.83 $25.77 $28.47 $31.97 $ 33.35

Pole maintenance $4.69 $3.92 $4.08 $7.13 $7.25

Capital carrying cost $80.19 $83.27 $91.79 $ 96.66

Total Indirect Costs $108.71 $112.96 $124.34 $137.26

ALLOCATION

No. of attachers 1.3 1.3 1.3 1.38 1.35

Allocation factor 34.3% 34.3% 34.3% 30.57% 31.24%

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S1

Page 2 of 2

Witness: BOLDT John

Allocate Indirect costs $37.29 $38.75 $42.65 $ 42.88

Calculated rate $41.28 $42.82 $46.76 $47.67

Adjust to 2018 $43.99 $47.43 $47.67

1

Response: 2

3

EB-2015-

0141

Decision

Ex H1 - Joint

Use Charges

(31-Mar-2017)

Ex H1 - Joint

Use Charges

(07-Jun-2017)

Pole Rate

Calculations

(28-May-2018)

Pole Rate

Calculations

(28-May-2018)

Determined

using Old

Methodology

Determined using OEB

Methodology,

described in EB-2015-0304

2014 actuals 2015 actuals 2016 actuals

2017

actuals

2018

forecast

DIRECT COSTS

Admin Costs $0.90 $ 0.92 $ 0.93 $1.601 $1.59

Loss in productivity $3.09 $ 3.15 $ 3.18 $3.20 $3.222

Total Direct Costs $3.99 $ 4.07 $ 4.11 $4.80 $4.81

INDIRECT COSTS

Net embedded cost $944.49 $1,058.06 $1,178.33 $1,237.22 $1,290.58

Depreciation rate 1.7% 1.7% 1.7% 1.82% 1.82%

Pre-tax carrying cost 8.49% 7.87% 7.79% 7.33%3 7.49%

Depreciation cost $23.83 $25.77 $28.47 $31.97 $ 33.35

Pole maintenance $4.69 $3.92 $4.08 $7.13 $7.25

Capital carrying cost $80.19 $83.27 $91.79 $90.69 $ 96.66

Total Indirect Costs $108.71 $112.954 $124.34 $129.79 $137.26

ALLOCATION

No. of attachers 1.3 1.3 1.3 1.38 1.35

Allocation factor 34.3% 34.3% 34.3% 30.57% 31.24%

Allocate Indirect costs $37.29 $38.744 $42.65 $39.68 $ 42.88

Calculated rate $41.28 $42.784 $46.75

4 $44.48 $47.69

2

Adjust to 2018 $43.995 $47.43

5 $45.01 $47.69

2

4

1 $9,000 (as filed in 1-54-VECC-S130(a)) + $1,151,190 (as filed in I-54-VECC-S131(c)) 2 As corrected in I-54-VECC-134(c) 3 Refer to I-54-VECC-S140(b) 4 Amount corrected as it did not correspond to filed evidence. 5 This rate was determined using the Old Methodology and is not comparable to the rates determined by the New Methodology.

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S2

Page 1 of 4

Witness: BOLDT John


2

Issue: 3



6

Reference: 7

Responses to Rogers Interrogatories 8

9

Interrogatory: 10

1. In Rogers-03(1), we asked you to provide the 2017 average Net Embedded Cost (NEC) and 11

the average current installed cost for various sizes of poles. You responded as follows: 12

13

Hydro One does not track installed value per pole length. Hydro One’s average pole cost in 14

all types of situations, and setting conditions, for the yearly pole replacement program for 15

2016 is $8,350. 16

17

a) Is this response still valid? 18

19

b) If you do not track installed value per pole length, what do you track with respect to the 20

installed costs of your poles? 21

22

c) If you do not track installed value per pole length, how did you come up with an average 23

value of $8,350 for 2016? Is this a weighted average? What is it based on? Please show the 24

calculation you used to come up with this value. 25

26

d) You claim that you do not track installed value per pole length, but if your auditors, 27

shareholders or the Board were to ask you how much more expensive it is to install a 50-foot 28

pole with multiple power facilities versus a 40-foot foot pole with only single power facilities 29

(on average and under similar installation conditions), what information would you provide? 30

31

e) For the purpose of this question, assume the most common installation conditions for a pole 32

in Hydro One’s territory. If we assign a value of 100% as a baseline for the installation costs 33

(materials and labour) of a 40-foot pole, provide the relative installation costs, as a 34

percentage of the 40-foot pole, for the other lengths of joint use poles. Please use 2017 35

values. 36

37

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S2

Page 2 of 4

Witness: BOLDT John

Pole Height Installed Cost

Relative to 40’ pole

<=25

30

35

40 100%

45

>=50

1

2. In Rogers-03(3), we asked you to describe under what circumstances poles other than the 2

standard 40-foot pole would be used. While we understand that any size of pole can 3

accommodate a telecom attachment, it would appear that each size or type of pole is designed 4

for a particular purpose or application. Under this assumption, we have attempted to interpret 5

and reproduce your responses in the table below in order to describe the primary or principle 6

application of each type of pole. Please review this table and confirm that we have done so 7

properly. If we have not done so, please make the necessary corrections. 8

9

Pole Height Primary purpose or application

<=25 - Secondary power and telecom service poles

- Backlot construction (No vehicle access)

30 - Secondary power and telecom service poles

- Backlot construction (No vehicle access)

35 - Secondary power and Telecom service poles

- Road crossing

35 - Guying poles for road crossings (stub pole)

40 - Standard LDC/Telecom JUP

- Side of a road

45 - Standard LDC/Telecom JUP

- Road or highway crossing

50 - Standard LDC/Generator JUP

- Along the side of a road

55-60 - Standard LDC/Generator JUP

- Road or highway crossing

Above 65 - LDC/Generator JUP (HONI + multiple circuits)

- Deep ditches and ravines

3. In Rogers-03(4), we asked you why telecom attachers should contribute to the costs of larger 10

poles in circumstances where they do not require the additional height, and you responded as 11

follows: 12

13

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S2

Page 3 of 4

Witness: BOLDT John

For long road crossings, and in designing at maximum sag, poles above 40 ft. need to be 1

used to allow the carrier to be able to stay a safe distance above the ground. This is also the 2

case when crossing a road that has deep ditches, as well as when running parallel to a 3

highway to cross driveways, or obstacles. 4

5


7

b) Of the total number of poles 50 feet or higher, how many are required for clearance issues 8

(i.e., road crossings, deep ditches and ravines)? 9

10

4. Please provide the total number of telecom attachers per joint use pole for each size of pole 11

listed for the years 2017 and 2018 (forecast). 12

13

Pole Height 2017 2018

<=25

30

35

35

40

45

50

55-60

Above 65

14

Response: 15

1. 16

a) Yes 17

18

b) In USoA 1830, we track the total capitalized cost of all poles and fixtures less any customer 19

contribution. 20

21

c) The calculation that underpins the data for Pole Replacement Gross Cost per unit is found in 22

Exhibit B1-1-1 DSP 1.4 page 6. 23

24

d) – e) 25

The OEB’s Procedural Order 8 (“PO8”) provides for interrogatories to address the 26

consistency of Hydro One’s updated evidence on its proposed Joint Use Telecom Charge 27

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S2

Page 4 of 4

Witness: BOLDT John

with the methodology adopted by the OEB in the pole attachment report. This interrogatory 1

is not relevant to the scope defined by PO8. 2

3

2. Please refer to I-54-Rogers-S2 Q1 d). 4

5


7


Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S3

Page 1 of 3

Witness: BOLDT John


2

Issue: 3



6

Reference: 7


Ex H1 - Joint Use Charges (31-Mar-2017) 9



12

Interrogatory: 13

1. The table below was created using the data provided by Hydro One throughout this 14

proceeding and the EB-2015-0141 proceeding. We have calculated the percentage changes 15

since 2014. 16

2014

actuals

2015

actuals

2016

actuals

2017

actuals

2018

forecast

Total poles 1,575,195 1,571,384 1,562,984 1,564,628 1,566,272

Percentage change -- -0.2% -0.8% -0.7% -0.6%

Joint use poles 576,068

525,492 537,719

Percentage change --

-8.8% -6.7%

Gross book value $1,649 $1,783 $1,970 $2,067 $ 2,158

Percentage change -- 8% 19% 25% 31%

NEC $1,111 $1,245 $1,386 $1,456 $ 1,518

Percentage change -- 12% 25% 31% 37%

17

a) Please confirm the values provided in the above table, fill in the missing values and correct 18

any errors. 19

20

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S3

Page 2 of 3

Witness: BOLDT John

b) Since 2014, the total number of poles for 2017 and 2018 have decreased by 0.7% and 0.6% 1

respectively. Yet, for the same years, the gross book value per pole increased by 25% and 2

31%, and the NEC per pole increased by 31% and 37%. 3

4

Please explain how the number of poles can drop slightly but the NEC can increase by a wide 5

margin. What is driving the increase to net embedded cost? 6

7

In responding to this question, please provide all evidence and calculations that substantiate 8

your response. 9

10

Response: 11

1. a) 12

c) 13

2014

actuals

2015

actuals

2016

actuals

2017

actuals

2018

forecast

Total poles 1,575,195 1,571,384 1,562,984 1,564,628 1,566,272

Percentage change

relative to 20141 --

-0.2% -0.8% -0.7% -0.6%

Joint use poles 576,0682 573,780

3 513,265

4 525,492 537,719

Percentage change


-0.40% -10.9% -8.8% -6.7%

Gross book value $1,649 $1,783 $1,970 $2,067 $ 2,158

Percentage change


8% 19% 25% 31%

Net Embedded Cost $944.49 $1,058.065 $1,178.33

6 $1,237.22

7 $1,290.58

8

Percentage change


12% 25% 31% 37%

14

1 Hydro One has clarified this description. 2 As filed in EB-2015-0141, on September 8, 2015, I-3-5(b) (VECC), page 2 of 3 3 As filed in EB-2017-0049, on February 12, 2018, I-51-VECC-119(a), page 2 of 2 4 As filed in EB-2017-0049, on February 12, 2018, I-54-Staff-260(b), page 2 of 2 5 As filed in EB-2017-0049, original filing on March 31, 2017, H1-02-03, page 103 of 112 6 As filed in EB-2017-0049, Blue Page Update filed on June 7, 2017, H1-02-03, page 103 of 112 7 As filed in OEB workform on May 28, 2018. 8 As filed in OEB workform on May 28, 2018.

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S3

Page 3 of 3

Witness: BOLDT John

Gross Book Value is calculated as Acquisition Value, divided by the Total Number of Poles. Net 1

Embedded Cost is calculated as [(Acquisition Value-Accumulated Depreciation)/Total Number 2

of Poles]*85%. 3

d) As 4

b) Please refer to I-54-Staff-S3 (a). 5

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S4

Page 1 of 3

Witness: BOLDT John


2

Issue: 3



6

Reference: 7






13

Interrogatory: 14

1. The table below was created using the data provided by Hydro One throughout this 15

proceeding and the EB-2015-0141 proceeding. We have calculated the change between 2017 16

and 2018. 17

Total Poles 2017 2018 Delta

30 223,024 218,682 -4,342

35 500,014 496,621 -3,393

40 432,907 437,937 5,030

45 233,978 237,925 3,947

50 and higher 163,968 165,657 1,689

Unknown 10,737 9,450 -1,287

Total 1,564,628 1,566,272 1,644

Joint Use Poles 2017 2018 Delta

30 48,615 48,775 160

35 143,681 146,379 2,698

40 151,467 156,110 4,643

45 108,754 112,277 3,523

50 and higher 71,930 73,139 1,209

Unknown 1,045 1,039 - 6

Total 525,492 537,719 12,227

ATTACHERS 2017 2018 Delta

Telecom 302,268 303,394 1,126

Overlashers - - -

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S4

Page 2 of 3

Witness: BOLDT John

Bell Canada 331,238 331,238 -

Streetlights 77,341 77,341 -

LDC Generators 14,263 14,267 4

Total 725,110 726,240 1,130

1

a) Please confirm the values provided in the table above. If there are any errors or omissions, 2

please correct them. 3

4

b) Between 2017 and 2018, you forecast that joint use poles (i.e., poles with third party 5

attachers) will increase by 12,227. However, the number of attachers will only increase by 6

1,130. Intuitively, this does not seem to correlate. How can joint use poles increase without a 7

corresponding increase in the number of attachers on those poles? Please explain, providing 8

all necessary supporting calculations and assumptions, how this is possible. 9

10

c) If LDC/Generator attachers always use joint use poles that are at least 50 feet, how is it 11

possible that, for 2017, there are 71,930 joint use poles that are 50 feet or higher, but only 12

14,263 LDC/Generator attachers? 13

14

What kinds of attachers are on the remaining 57,677 poles? 15

16

Please explain, with all necessary supporting calculations and assumptions. 17

18

d) If telecom attachers that overlash to the existing strand of other telecom attachers are 19

required to get a permit and pay the pole attachment charge, why do you show the number of 20

overlashers as zero? 21

22

Response: 23

a) Confirmed. 24

25

b) Hydro One’s pole data regarding Joint Use poles are constantly being updated by data 26

collection activities. Furthermore, the number of Joint Use poles can increase due to new 27

pole installations (for example new road crossing poles, new interspaced poles for new 28

services, asset sales and purchases, or line relocations and sustainment work that require 29

shorter spans). Because permits may not be updated and submitted when these new 30

attachments are made there is a lag in the database until the next inspection cycle. Please 31

refer to interrogatory I-VECC-S136 for a derivation of 12,227. 32

33

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S4

Page 3 of 3

Witness: BOLDT John

c) The remaining 57,677 poles are occupied by either telecom carriers, or streetlights. Where 1

Hydro One and a carrier are on the pole, poles 50 ft. or greater may be required due to terrain 2

changes, grading of poles, and/or ravines. 3

4

d) Hydro One does not separately track overlashers. The overlashers are tracked as a regular 5

telecommunications attachment. 6

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S5

Page 1 of 3

Witness: BOLDT John


2

Issue: 3



6

Reference: 7


9

Interrogatory: 10

1. Please provide a detailed description of what process is required for Hydro One to replace a 11

joint use pole (i.e., a pole that has third party attachers on it). In your description, please 12

include: 13

Notification of attachers and timelines; 14

Design and engineering; 15

Make-ready work and apportionment of make-ready costs; 16

Cutover or transfer of Hydro One facilities and all attacher facilities to the 17

replacement pole. 18

19

2. In Rogers-04(1), we asked you to provide the number of joint use poles that were replaced 20

pursuant to a proactive pole replacement or other capital program (as opposed to replacement 21

as part of ongoing maintenance). You responded as follows: 22

23

Hydro One is unable to supply this information because we do not track to this level of 24

granularity. 25

26

a) If you do not track to this level of granularity, what do you track with respect to pole 27

replacements? 28

29

b) Please describe the reasons or the conditions under which you replace poles. 30

31

c) Which account codes are used to record pole replacement expenditures? 32

33

d) How do you identify which poles require replacement? 34

35

e) How do you budget which poles will be replaced in a given year and in future years? 36

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S5

Page 2 of 3

Witness: BOLDT John

f) Please complete the following tables regarding the number of poles replaced for each year 1

stated. 2

3

Total poles replaced 4

5

Pole Height 2014 2015 2016 2017

<=25

30

35

35

40

45

50

55-60

Above 65

6

7

Joint use poles replaced 8

Pole Height 2014 2015 2016 2017

<=25

30

35

35

40

45

50

55-60

Above 65

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S5

Page 3 of 3

Witness: BOLDT John

3. In each of the years 2014 to 2017, how many poles were replaced as part of (1) ongoing pole 1

maintenance and (2) a proactive pole replacement program due to the requirements of Hydro 2

One, other LDCs or third party generators? 3

4

4. In each of the years 2014 to 2017, how many joint use poles that had telecom attachers were 5

replaced? 6

7

If your response is that Hydro One does not track to this level of granularity, please explain 8

how you can conduct pole replacements without knowing who is on the poles and arranging 9

the transfer to the replacement pole. 10

11

Response: 12


14

2. a) – b), d) – f) Please refer to I-54-Rogers-S2 Q1 d). 15

16

c) USoA 1830 (Dx Poles, Towers and Fixtures) is used to record pole replacement costs 17

associated with the poles and fixtures (crossarms, brackets, down guys, etc.). 18

19

USoA 1835 is used to record expenditures associated with overhead conductors and 20

devices (i.e. insulators, wire if needed). 21

22

3. - 4. Please refer to I-54-Rogers-S2 Q1 d). 23

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S6

Page 1 of 4

Witness: BOLDT John


2

Issue: 3



6

Reference: 7


9

Interrogatory: 10

1. Please complete and confirm the entries in the following table using the most current 11

information available (2017). Please enter actual numerical values and not references to OEB 12

orders or evidentiary documents. 13

14

Attacher

Qty (end

of 2017)

Current

Rate

2017

Rate

2018

Rate

Telecom attachers

Bell pole-sharing (Full) N/A N/A

Bell pole-sharing (Clearance)

Other Telecom (Full) $41.28 $47.43

Other Telecom (Clearance) $30.96 $47.43

Generator Telecom $41.28 $47.43

Total Telecom

Other attachers

Generator power facilities $85.25

LDC power facilities $85.25

Streetlights $2.04 $2.04

Total Other

Wireless attachers

Bell antennas and wireless equip.

Other antennas and wireless equip

Total Wireless

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S6

Page 2 of 4

Witness: BOLDT John

2. In your response to Rogers-05(1) regarding the number of Bell clearance poles, you 1

responded with “N/A”. What does this mean? Is it that Bell does not have any clearance 2

poles? Or is it that Bell clearance poles are included in a different row in the table? 3

Regardless of the answer, please provide the number of clearance poles used by Bell. 4

5

3. In Rogers-05(2), Rogers-05(8)(b) and Rogers-05(8)(c), we asked you why streetlights 6

continue to pay only $2.04 when compared to other pole attachers, and whether Hydro One 7

was under-recovering its costs and therefore requiring the ratepayers to subsidize these 8

attachments. You responded as follows: 9

10

For streetlight rates of $2.04 per year, $2.04 is a rate that was negotiated over 25 years ago 11

for a light to be attached to a distribution 20 pole. Over the years, municipalities have 12

lobbied the provincial government for the right to charge utilities for poles occupying their 13

municipal right of ways. If Hydro One were to increase that rate, there is a risk that 14

municipalities may get the right to charge for poles on right of ways, which would 15

significantly increase the burden on the Hydro One ratepayer. 16

17

a) To your knowledge, when was the last time a municipality lobbied the provincial government 18

for the right to charge utilities for their poles on municipal rights-of-way? Please provide 19

evidence of such lobbying efforts. 20

21

b) You state that if Hydro One were to increase the streetlight rate, there is a risk that 22

municipalities may obtain the right to charge for poles on their rights-of-way. Please describe 23

the nature and quantum of this “risk”. What would have to be done from a legislative point of 24

view to make this happen? 25

26

c) You state that if municipalities get the right to charge for poles on municipal rights-of-way, 27

this would significantly increase the burden on Hydro One ratepayers. 28

29

i. What do you mean by “significantly”? 30

31

ii. Have you actually assessed the quantum of this risk that this may impose on 32

residential ratepayers? If so, what is that value? How much more would 33

residential ratepayers end up paying? 34

35

d) Provide a list of the top ten municipalities that are using Hydro One poles for streetlights and 36

show how many poles each municipality utilizes. Please use 2017 numbers. 37

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S6

Page 3 of 4

Witness: BOLDT John

4. We understand that Bell and Telus have been very active in the deployment of small cell 1

antennas in the Province of Ontario, including on utility poles. 2

3

a) Has Hydro One entered into any agreements with Bell or other telecoms to allow them to 4

attach antennas or other wireless equipment to Hydro One’s joint use poles, now or in the 5

future? 6

7

b) What is the pole attachment rate under these agreements? 8

9

5. In Rogers-05(2), we asked how Hydro One intends to treat the revenues it may receive from 10

wireless attachments, and whether it would adjust the wireline telecom pole attachment rate 11

to reflect the additional revenues derived from these new pole attachments. You responded as 12

follows: 13

14

Wireless attachment revenue will not be used to reduce the regulated amount for wireline 15

attachments. It will be reported as external revenue, which will reduce Hydro One’s 16

distribution rate revenue requirement. 17

18

a) Does this statement still reflect your views? 19

20

b) If you do not intend to adjust the wireline attachment rate, please provide a rationale for this 21

decision and explain why it would still be reasonable from a rate-making perspective. 22

23

c) Has this treatment of wireless attachment revenues been approved by the OEB? What makes 24

you think that the Board would approve this approach? 25

26

Response: 27

1. 28

Attacher

Qty (end

of 2017)*

Current

Rate

2017

Rate

2018

Rate

Telecom attachers

Bell pole-sharing (Full) 298,114 N/A N/A N/A

Bell pole-sharing (Clearance) 33,124 N/A N/A N/A

Other Telecom (Full) 274,463 $41.28 $41.28 $47.691

1 Correction to Rogers Interrogatory. See I-54-VECC-S134(c).

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S6

Page 4 of 4

Witness: BOLDT John

Attacher

Qty (end

of 2017)*

Current

Rate

2017

Rate

2018

Rate

Other Telecom (Clearance) 24,122 $30.96 $30.96 $47.691

Generator Telecom 3,683 $41.28 $41.28 $47.691

Total Telecom 633,506

Other attachers

LDC & Generator power facilities 14,263

Sliding

Scale, 10

ft. of space

= $47.82

Sliding

Scale, 10

ft. of

space =

$47.82

$85.25

Streetlights 77,341 $2.04 $2.04 $2.04

Total Other 725,110

Wireless attachers

Bell antennas and wireless equip. 0 N/A N/A N/A

Other antennas and wireless equip 0 N/A N/A N/A

Total Wireless 0

*The attacher numbers submitted in the first column (“Qty. (end of 2017)) represent the volumes at the beginning of 2017 as 1

these would have been used for billing in 2017. 2

3

2. The clearance poles were included in the total number of Bell attachments in Rogers 5(1). 4

The number of Bell attachments are separated in the table above. 5

6

3. - 5. Please refer to I-54-Rogers-S2 Q1 d). 7

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S7

Page 1 of 5

Witness: BOLDT John


2

Issue: 3



6

Reference: 7




Pole Attachment Report 11


13

Interrogatory: 14

1. In your response to Rogers-06(1), you stated that no pole replacement costs had been 15

included in Pole Maintenance Expenses. You also stated that poles replaced at the request of 16

a third party are capitalized at the cost, less the third party’s contribution, and the third 17

party’s contribution is inserted into Account 1830 as a negative value. 18

19

a) Are these responses still valid? 20

21

b) Please provide a page from your audited financial statements or other suitable documents that 22

demonstrates this practice of including a third party’s contribution as a negative value in 23

Account 1830. 24

25

2. In your response to Rogers-06(2), you confirmed that power assets and other equipment 26

owned or operated by Hydro One that are located on poles owned by other parties such as 27

Bell are included in Account 1830, and therefore the calculation of NEC. 28

29

We then asked you to provide a value for these assets (or your best estimate) for the years 30

2015, 2016 and 2017. You responded that Hydro One does not specifically track the cost of 31

these fixtures separately in Account 1830. 32

33

a) If you do not “specifically track the cost of these fixtures separately”, then please explain 34

what you do track with respect to these fixtures. 35

36

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S7

Page 2 of 5

Witness: BOLDT John

b) If you still claim to have no viable numbers, please provide your best estimate. In doing so, 1

please show how the number was obtained with supporting calculations, documents, 2

assumptions and rationale. Who from Hydro One (including their title and job description) 3

prepared this estimate? 4

5

c) Do you agree that these costs should not be included in the common costs of the pole that are 6

shared with the telecom attacher? 7

8

d) Please describe what fixtures and other equipment Hydro One has installed on Bell-owned 9

poles. 10

11

e) How many Bell-owned poles does Hydro One use for its power facilities? Please provide 12

your answer for each of the years 2014-2018. 13

14

3. The following questions have to do with make-ready costs paid by telecom attachers. 15

16

a) Please describe the process under which a prospective telecom attacher is required to pay 17

make-ready costs to attach to a joint use pole. 18

19

b) In Rogers-06(2)(a), we asked you to provide the value of make-ready costs paid by telecom 20

attachers in each of the years 2015-2017. You responded that you do not “track to this level 21

of granularity”. 22

23

Please explain how it is that you do not have records of make-ready costs paid by telecom 24

attachers when you have to invoice them for such costs? What records of make-ready costs 25

do you maintain? 26

27

c) In your response to Rogers-06(2)(b), you asserted that telecom make-ready costs are 28

included as a negative value in Account 1830. Please provide evidence from your 2017 29

audited financial statements that demonstrates this practice. 30

31

4. In your response to Rogers-06(4), you confirmed that, unless a common anchor is used, a 32

telecom attacher is responsible for the costs of its own guying and anchors. 33

34


36

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S7

Page 3 of 5

Witness: BOLDT John

b) Are the costs of guying and anchoring for all poles included in Account 1830? What is the 1

value of these costs for the years 2017 and 2018. 2

3

c) If your response is that you do not track to this level of granularity, then please provide an 4

estimate, including all assumptions and rationale to support the estimate. Who from Hydro 5

One, including their title and job description, prepared this estimate? 6

7

d) If a telecom attacher is responsible for its own guying and anchors, why should guys and 8

anchors be included as part of the NEC for the purpose of determining the pole attachment 9

rate? Shouldn’t these fall under pole-specific costs? Explain why or why not. 10

11

5. In your response to Rogers-07(1), you stated that, over the last 10 years, 3,356 poles were 12

replaced to accommodate the facilities of generators. 13

14

a) How many poles were replaced for this purpose in each of the years 2014 to 2017? 15

16

b) How many poles do you expect to replace for this purpose in 2018? 17

18

c) What is the value of the capital contributions provided by the generators for these poles in 19

each of the years 2014 to 2017? 20

21

d) You also stated that these capital contributions were included as a negative value in Account 22

1830. Please provide evidence from your audited financial statements that demonstrate this 23

transaction. 24

25

6. Hydro One has chosen to complete the OEB’s Work Form, which allows an LDC to input its 26

“Distributor Specific Inputs”. Hydro One has done this for all the cost inputs and number of 27

poles and attachers. Yet, despite the Work Form having a cell to input a specific percentage 28

for power-only assets, you have simply chosen to use 15%. 29

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S7

Page 4 of 5

Witness: BOLDT John

In the Pole Attachment Working Group (PAWG) proceeding leading up to the Pole 1

Attachment Report, Hydro One provided a detailed “proxy” for calculating the percentage of 2

power-specific assets on joint use poles. This proxy methodology came up with a ratio of 3

17%, which was then whittled down to 15% to take into account certain extraordinary 4

expenses. (It should be noted that the calculations and assumptions in this proxy were not 5

challenged or substantiated.) 6

7

Given that Hydro One has now decided to seek a pole attachment rate based on its 8

distributor-specific factors, please provide a detailed analysis that calculates the power-9

specific asset percentage, using a methodology similar to the proxy provided by Hydro One 10

in the PAWG proceeding. (Rogers reserves the right to review and challenge whatever Hydro 11

One prepares, whether through additional interrogatories or a technical conference.) 12

13

7. Does Account 1830 include structures such as towers that are not poles? If so, what is the 14

2017 and 2018 (forecast) values of these assets? 15

16

Response: 17

1. a) The amounts capitalized in USoA 1830 are the costs, minus the third party contributions. 18

19

b) All Hydro One plant and equipment is recorded at original cost, net of customer 20

contributions, and any accumulated impairment losses. The cost of additions, including 21

betterments and replacement asset components, is included on the Consolidated Balance 22

Sheets as property, plant and equipment1. 23

24

2. a) USoA 1830 tracks all Hydro One owned poles and fixtures. 25

26

b) Please refer to I-54-Rogers-S2 Q1 d). 27

28

c) Yes. The OEB methodology includes a 15% reduction of Net Embedded Costs to remove 29

power specific assets. 30

31

d) The types of fixtures and other equipment that Hydro One has installed on Bell-owned 32

poles are the same that Hydro One has attached to our own poles. 33

34

e) Please refer to I-54-Rogers-S2 Q1 d). 35

1 Interrogatory I-01-SEP-001 Attachment 1, page 9.

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S7

Page 5 of 5

Witness: BOLDT John


2

4. 3

a) Yes 4

5

b) Yes, the costs of guying and anchoring for all poles are included in USoA 1830. Hydro 6

One is unable to distinguish these costs in USoA 1830. 7

8

c) Following the OEB’s accounting guidelines, Hydro One is unable to distinguish these 9

costs in USoA 1830. 10

11

d) Guying and anchoring costs are included as fixtures in USoA 1830. In following the 12

OEB’s workform, Net Embedded Cost is reduced by 15% to account for these fixtures. 13

14

5. a) - c) Please refer to I-54-Rogers-S2 Q1 d). 15

16

d) Please refer to 1 b) above. 17

18


20

7. Distribution steel towers are included in USoA 1830. The total value of these assets is below 21

the materiality threshold. 22

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S8

Page 1 of 3

Witness: BOLDT John


2

Issue: 3



6

Reference: 7




11

Interrogatory: 12

1. In all versions of your calculations for the LDC/Generator pole attachment rate, you applied 13

Hydro One’s productivity factor to a variety of components of that rate, including: 14

the CPI adjustment to determine the rates from 2018 to 2022; 15

loss of productivity costs; and 16

administrative costs. 17

18

a) How come you use a productivity factor for the pole attachment rate for LDC/Generator 19

attachers but not for telecom attachers? It is, after all, the same pole. Please explain this 20

inconsistency. 21

22

b) If your answer is that, in the Pole Attachment Report, the OEB determined that there 23

should be no productivity factor for telecom attachers, then please explain why this 24

inconsistency in rate-making practice should exist and should not offend regulatory 25

principles. 26

27

2. When calculating the 2018 LDC/Generator pole attachment rate, you used 2016 actuals for 28

NEC to derive a 2017 rate. You then adjusted the 2017 rate with CPI and your productivity 29

factor in order to come up with a 2018 rate. Yet, in calculating the 2018 pole attachment rate 30

for telecom attachers, you used forecast numbers for 2018. 31

32

a) Please confirm that, in the EB-2015-0141 Decision, the OEB directed that Hydro One should 33

use historical, and not forecast, numbers when calculating the telecom pole attachment rate. 34

If this is not the case, then provide your understanding of this decision. 35

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S8

Page 2 of 3

Witness: BOLDT John

b) Please confirm that the Pole Attachment Report does not require an LDC to use forecast 1

costs for the telecom pole attachment rate. If this is not the case, then provide your 2

understanding of this report. 3

4

c) Please explain why the pole attachment rate for LDC/Generator attachers uses historical 5

numbers (actuals) but the rate for telecom attachers uses forecast figures? It is, after all, the 6

same pole. Please explain this inconsistency. 7

8

d) If your answer is that the Pole Rate Work Form includes a column for 2018 forecast 9

numbers, then please explain why this inconsistency in rate-making should exist and should 10

not offend regulatory principles. 11

12

3. In Figure 1 at p.106 of Ex H1 - Joint Use Charges (26-Jun-2018), you demonstrate that 13

each of the two power attachers, Hydro One and the LDC/Generator, is responsible for 14

38.6% of the space on a 50 foot pole. Combined, the two power attachers are responsible for 15

77.2% of the pole and the associated common costs. This leaves 22.8% for the telecom 16

attachers. 17

18

However, the methodology you use for telecom attachers assigns 31.2% of the space (and 19

31.2% of the common costs) to the telecom attachers. As we see it, for these kinds of poles, 20

Hydro One is recovering at least 108.4% of its common costs. 21

22

Please confirm our understanding and explain why Hydro One is over-recovering its 23

common costs by 8.4% and explain why the telecom attacher allocation factor for these poles 24

should not be 22.8%. If you do not agree, please explain why. 25

26

Response: 27

1. a) Hydro One has applied the OEB’s methodology for determining the telecom Joint Use 28

rate. 29

30


32

2. a) Please refer to I-54-Rogers-S2 Q1 d). 33

34

b) The OEB workform uses 2018 forecasted costs to determine the current pole 35

attachment charge. 36

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S8

Page 3 of 3

Witness: BOLDT John

c) Hydro One has applied the OEB’s methodology for determining the telecom Joint Use 1

rate. 2

3

d) Please refer to I-54-Rogers-S2 Q1 d). 4

5


Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S9

Page 1 of 2

Witness: BOLDT John


2

Issue: 3



6

Reference: 7



Pole Attachment Report 10


12

Interrogatory: 13

1. In the PAWG Proceeding, two LDCs provided estimates of what portion of pole maintenance 14

costs should be allocated to telecom attachers. Hydro One, with a pole population of roughly 15

1.5 million poles, proposed 5% and Hydro Ottawa, with just over 3% of Hydro One’s pole 16

population, proposed 92%. In the absence of any additional data and, without an exploration 17

of why this huge disparity existed, the Board determined that it would be appropriate to use 18

the median or average of 5% and 92%, to come up with 48.5%. 19

20

a) Please confirm if that is also your understanding of how the Board came up with a figure of 21

48.5%. 22

23

b) If this is not your understanding, provide what your understanding is. 24

25

2. Hydro One has chosen to complete the OEB’s Work Form, which allows an LDC to input its 26

“Distributor Specific Inputs”. Hydro One has done this for all the cost inputs, as well as the 27

number of poles and attachers. Yet, despite the Work Form requiring a specific input for 28

allocation of pole maintenance costs, Hydro One has chosen to use 48.5%. 29

30

a) Please explain why Hydro One has used 48.5% when it calculated and proposed 5% in the 31

PAWG Proceeding. 32

33

b) Please substantiate why you believe 48.5% is the appropriate number in light of your 5% 34

calculation. 35

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S9

Page 2 of 2

Witness: BOLDT John

3. At page 109 of Ex H1 - Joint Use Charges (26-Jun-2018), you calculate pole maintenance 1

cost for LDC/Generator attachers, arriving at a figure of $4.08 per pole. Yet, in this 2

proceeding, you are proposing $7.13 for telecom attachers. 3

4

Please explain why you think it is reasonable for telecom attachers to pay a larger share of 5

the pole maintenance costs than the LDC/Generators when the LDC/Generators take up more 6

space on a pole. 7

8

4. Please demonstrate how you determined the 5% allocation in the PAWG Proceeding, 9

showing all calculations and assumptions. 10

11

5. Please provide a detailed calculation for Pole Maintenance Expenses, similar to what you 12

have provided in your calculations for the LDC/Generator pole attachment rates. 13

14

Response: 15


17

2. 18

a) Hydro One has applied the OEB’s methodology and pole maintenance cost allocation 19

factor for determining the Telecom Joint Use rate. 20

21


23


25


27

5. Hydro One has applied the OEB’s methodology to pole maintenance costs, Account 5120, 28

and presented these costs in the OEB work form. 29

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S10

Page 1 of 2

Witness: BOLDT John


2

Issue: 3



6

Reference: 7


9

Interrogatory: 10

In your Admin Costs of $1.59 per pole, you include $1,109,258 for “Joint Use Staff Specific 11

Labour”. 12

13

1. Please describe in detail each of the applicable staff, including their job title and the functions 14

they perform in their roles in support of these Admin Costs. 15

16

2. In addition to telecom attachments, do these staff members perform administrative work in 17

respect of LDC/Generator attachments, Bell attachments (under pole-sharing arrangements) 18

and streetlights? 19

20

3. In the years 2015, 2016 and 2017, how many permits did they review and issue for: 21

22

a) Telecom attachments that are required to pay the pole attachment rate; 23

24

b) LDC/Generator attachments; 25

26

c) Bell attachments (under pole-sharing arrangements); and 27

28

d) Streetlights. 29

30

Response: 31

1. The team consists of one clerk, three Joint Use officers, a supervisor, and a senior manager. 32

The team monitors approximately 580 agreements, creates memos, resolves disputes, trains 33

staff, monitors permits, issues invoices, monitors accounts receivables, performs Regulation 34

22/04 audits, works with joint use standards, distribution rate filings and, writes and 35

negotiates new agreements. 36

37

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S10

Page 2 of 2

Witness: BOLDT John

2. Yes. 1

2

3. The team does not review and issue permits. This work is performed by field staff. 3

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S11

Page 1 of 2

Witness: BOLDT John


2

Issue: 3



6

Reference: 7


9

Interrogatory: 10

1. For your Loss of Productivity Costs of $3.20 per pole, you use $2,321,078 for 11

labour and vehicles associated with trouble calls dispatched on behalf of telecom attachers. 12

13

a) In 2017, how many, and what percentage, of these trouble calls were associated with Bell 14

attachments (under pole-sharing arrangements)? 15

16

b) You describe numerous activities (Labour Types) required in connection with these trouble 17

calls, such as DOMC, RLM and Clerical – Scheduling/CIS. For each Labour Type in this 18

table, please describe what the acronyms mean and what activities are undertaken. 19

20

2. You state that the Loss of Productivity costs are based on 2017 hours and 2018 Labour 21

Dollars. What is the difference between 2017 Labour Dollars and 2018 Labour Dollars? How 22

were 2018 Labour Dollars determined? 23

24

Response: 25

1. 26

a) Trouble calls related to telecom wires are grouped together; the telecom attacher is not 27

recorded. 28

29

b) DOMC stands for Distribution Operations Maintenance Centre. The staff in the DOMC 30

will receive trouble calls from the customers, and dispatch the crews to address the 31

trouble call. 32

RLM stands for Regional Line Maintainers. They respond to the trouble call. 33

Clerical – Scheduling/CIS (Customer Information System) staff complete the paperwork 34

after the call. 35

36

37

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S11

Page 2 of 2

Witness: BOLDT John

2. Please see the table below for a comparison of the 2017 and 2018 fully burdened labour 1

rates. Please refer to I-54-VECC-134(c) for the correction to the Loss of Productivity cost 2

from $3.20 per pole, per attacher, to $3.22 per pole, per attacher. 3

4

Resource Type 2017 Labour Rate 2018 Labour Rate Increase in 2018

DOMC Staff $124.00 $125.00 $1.00

Regional Line

Maintainer* $123.00 $124.00 $1.00

Clerical –

Scheduling/CIS* $124.00 $125.00 $1.00

*The overtime rates are applied at 140% of the regular hours rates. 5

6

2018 Labour rates were determined based on standard labour rates for the resource doing the 7

work. 8

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Rogers-S12

Page 1 of 1

Witness: BOLDT John


2

Issue: 3



6

Reference: 7


9

Interrogatory: 10

1. Will the proposed pole attachment rate for Hydro One apply to Norfolk Power, Haldimand 11

County Hydro and Woodstock Hydro? If not, what pole attachment rate will apply to these 12

three LDCs and when will it come into effect? 13

14

2. Have you done any kind of analysis to demonstrate that these three LDCs share substantially 15

similar pole costs and number or telecom attachers as Hydro One has used in this 16

proceeding? 17

18

Response: 19

1. Hydro One’s proposed rate in this application will apply to the Acquired Utilities when they 20

are integrated in 2021. 21

22

Hydro One will apply the OEB’s province-wide wireline pole attachment charge as set out in 23

its Accounting Guidance on Wireline Pole Attachment Charges issued July 20th

, 2018 to the 24

Acquired Utilities’ Telecom customers, until their integration in 2021. 25

26

2. No. 27

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S1

Page 1 of 2

Witness: BOLDT John

OEB Staff Interrogatory # S1 1

2

Issue: 3



6

Reference: 7

Supplemental Explanation of Pole Attachment Rate Calculations, page 1; 8

HONI_SUB_Pole Attachment Workform_20180528, Tab 3. Direct Costs 9

10

Interrogatory: 11

Preamble: 12

13

In Tab 3 – Direct Costs of the Pole Attachment Workform, Table 4 - Administration Costs, 14

Hydro One has entered zero dollars for both Direct Labour Costs related to billing and permit 15

processing costs as well as for Inventory / direct purchases. 16

17

a) Please confirm there are no costs related to these sub accounts for all joint-use poles. 18

19

b) Are any costs related to these sub accounts being directly billed to carriers? 20

21

Response: 22

a) Confirmed. 23

24

Billing Costs: These costs are part of the Joint Use team’s labour costs (Other Support 25

Services Costs). Included is the Business Support Clerk, who verifies and releases bills for 26

printing and mailing. The clerk also monitors Account Receivables and handles 27

communication about invoices and bill collection. Hydro One’s third party accounts 28

receivable contractor prints the bills, mails them to the customer and enters the payments into 29

the system once received. The work associated with the contractor is minimal, and is part of a 30

larger contract, and therefore excluded from the calculation of the Joint Use rate. 31

32

Permit Processing Costs: The design technician work and permit processing costs would be 33

billed directly to the carrier 34

35

Inventory/Direct Purchases: The inventory administration costs for the provincial Joint Use 36

team are immaterial. 37

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S1

Page 2 of 2

Witness: BOLDT John

If there are any direct purchases associated with work in the field, those costs would be billed 1

directly to the carrier. 2

3

b) If there are any direct purchases associated with work in the field, those costs would be billed 4

directly to the carrier. 5

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S2

Page 1 of 2

Witness: BOLDT John


2

Issue: 3



6

Reference: 7


HONI_SUB_Pole Attachment Workform_20180528, Tab 3. Direct Costs 9

10

Interrogatory: 11

Preamble: 12

13

In Section 1.0 of the Supplemental Explanation, page 1, Hydro One provided the breakdown of 14

Admin Costs of $1.59 per attacher, per pole as follows: 15

16

GIS Tracking (Joint Use Database Maintenance): 17

(2018 Joint Use Database enhancement costs = $38,378) + (Annual maintenance costs = 50 18

hours x $181/hour = $9,050) = $47,428 19

20

Joint Use Staff Specific Labour: $1,109,258.50 21

22

Total Administration Costs = $47,428+$1,109,258.50 = $1,156,686.50 23

24

Administration Cost Per Pole, Per Attacher = (2018 Total Administration Costs/Qty. of Joint Use 25

Poles Extrapolated for 20,181)/2018 Number of Attachers Per Pole 26

27

Administration Cost Per Pole, Per Attacher = ($1,156,686.50/537,719)/1.35 = $1.59 28

29

a) Please confirm that the Joint Use Database enhancement costs of $38,378 are one-time costs. 30

What types of activities are included as part of Hydro One’s GIS tracking costs? 31

32

b) Please confirm whether there are additional Joint Use Database enhancements planned in the 33

5-year period. If yes, how will Hydro One take this cost increase into account going forward? 34

35

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S2

Page 2 of 2

Witness: BOLDT John

c) Hydro One has submitted a cost for Joint Use Labour of $1,109,258.50. Please provide more 1

detail on the types of labour activities that have been completed that are directly related to 2

carrier pole attachments. 3

4

d) Could any of the labour activities identified above be considered “make ready”? 5

6

e) Why does Hydro One consider its Administrative Cost to be reasonable? 7

8

Response: 9

a) The Joint Use Database enhancement costs of $38,378 are one-time costs for 2018. There 10

are also annual costs associated with the maintenance of a database. 11

12

Hydro One does not track GIS costs separately for Joint Use Poles. As submitted in Hydro 13

One’s May 28th

, 2018 Supplemental Explanation, the Joint Use Database costs have been 14

included under the GIS Tracking Cost. 15

16

b) No, however future enhancements to the database may be made where an update to the 17

system is required. 18

19

c) The labour that has been submitted is the labour associated to the overall provincial Joint Use 20

program. The team monitors agreements, creates memos, resolves disputes, trains staff, 21

monitors permits, issues invoices, monitors accounts receivables, performs Regulation 22/04 22

audits, works with joint use standards, distribution rate filings and writes and negotiates new 23

agreements. 24

25

d) No. 26

27

e) Hydro One has applied the OEB’s methodology using the OEB workform to determine its 28

Administration Cost. Hydro One has captured its Joint Use Database costs and total labour 29

costs that are not collected through make ready work, as make ready work costs are billed 30

directly to the third party. 31

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S3

Page 1 of 2

Witness: BOLDT John


2

Issue: 3



6

Reference: 7

Supplemental Explanation of Pole Attachment Rate Calculations, pages 1-2; 8

Evidence Updated: 2017-0607, Exhibit H1, Tab 2, Schedule 3, page 103 9

10

Interrogatory: 11

Preamble: 12

13

In Section 3.0 of the Supplemental Evidence, Hydro One provided the calculation of the 2018 14

Net Embedded Cost: 15

16

Net Embedded Cost (NEC) of $1,290.58 = {[2018 Forecasted Year End Acquisition Value, as 17

stated in D2-01-02-01, Page 5 of 5, USoA 1830, Cost, Closing Balance ($3,380,110,026.80) – 18

2018 Forecasted Year End Acquisition Value, as stated in D2-01-02-01, Page 5 of 5, USoA 19

1830, Accumulated Depreciation, Closing Balance ($1,002,000,428.80) = 20

$2,378,109,598.00]/Qty. of Poles Extrapolated for 2018 (1,566,272)}* 85% 21

22

And in Section 1, Hydro One provided the calculation of the 2016 Net Embedded Cost: 23

24

2016 Net Embedded Cost (NEC) of $1,178.33 = {[2016 Year End Acquisition Value, 25

($3,079,485,436) – 2016 Accumulated Depreciation ($912,770,751) = $2,166,714,685]/Qty. of 26

Poles December 31, 2016 (1,562,984)}* 85% 27

28

a) The Net Embedded Cost has increased by 9.5% (by staff’s calculations, $1,290.58 - 29

$1,178.33 = $112.25 increase). Please describe the factors that are driving this increase 30

which ultimately drives higher carrying charges. 31

32

b) Given Hydro One’s pole replacement programs over the next 5 years and planned mergers 33

and acquisitions of smaller utilities, does Hydro One anticipate similar year-over-year 34

increases in the Net Embedded Cost per pole? 35

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S3

Page 2 of 2

Witness: BOLDT John

c) If Hydro One’s Net Embedded Cost does escalate at the same rate over the next 5 years, 1

would the annual inflationary adjustment to the Hydro One’s new Pole Attachment charge 2

cover this increase? 3

4

Response: 5

a) Over the two year period (2016 to 2018), the driving factor for the increase has been the 6

addition of capital costs related to pole replacements (less the customer contribution). As 7

older poles are replaced year over year, the cost of the replacement poles are capitalized 8

within USoA 1830. 9

10

b) USoA 1830 will continue to reflect Hydro One’s capital investments. The impact of a merger 11

and acquisition on Hydro One’s Net Embedded Cost per pole would depend on the value of 12

the acquired utility’s USoA 1830 and the number of poles. 13

14

c) To the extent that costs inflate greater than the annual inflationary adjustment, the new pole 15

attachment charge would not cover the total increase. 16

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S4

Page 1 of 2

Witness: BOLDT John


2

Issue: 3



6

Reference: 7


Updated Evidence: 2017-0607, Exhibit H1, Tab 2, Schedule 3, page 103 9

10

Interrogatory: 11

Preamble: 12

13

In Section 4.0 of the Supplemental Explanation page 2, Hydro One provided Depreciation Cost 14

of $33.45: 15

16

4.0 Depreciation Cost of $33.35 17

18

Depreciation Rate = 1.82% 19

Depreciation Rate = 1/Hydro One’s Useful Life of Poles (as stated in C1-06-01, Attachment 20

1, Page 22) = 1/55 = 1.82% 21

22

and Updated Evidence: 2017-06-07, Exhibit H1, Tab 2, Schedule 3, page 103 Hydro One 23

provided: 24

25

2016 Depreciation Cost of $28.47 = [2016 Year End Acquisition Value 26

($3,079,485,436)*HONI Depreciation Rate (1.7%)*85% allocation factor remove any pole-27

associated assets]/Qty. of Poles (1,526,984). 28

29

In the HONI_SUB_Pole Attachment Workform_20180528, Tab Appendix Provincial Rate, the 30

other utilities that participated in the Pole Attachment Consultation had higher depreciation rates. 31

32

Hydro One’s supplemental evidence uses a depreciation rate based on a useful pole life of 55 33

years. In its evidence from 2017 noted above, Hydro One uses a 60 year pole life. 34

35

a) Please confirm that Hydro One is requesting that depreciation expense be calculated from a 36

useful life of 55 years. 37

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S4

Page 2 of 2

Witness: BOLDT John

b) Please provide rationale for the decrease in the useful lives of poles from 60 years to 55 1

years. 2

3

c) Does Hydro One have any evidence to show that joint-use poles have a shorter pole life 4

expectancy because of additional stresses placed on them because of third party attachments? 5

Should joint-use poles be depreciated at a different rate than dedicated power poles? 6

7

d) Will Hydro One’s planned pole replacement program impact the average pole useful life that 8

it assumes? 9

10

e) Does pole size impact the useful life of Hydro One poles? Has this been factored into the 11

average pole life that Hydro One assumes for its pole population? 12

13

f) What impact does geographical location have on pole life? Has this been factored into the 14

average pole life that Hydro One assumes for its pole population? 15

16

g) Are Hydro One poles more susceptible to storm damage than other utilities because of their 17

average age? 18

19

Response: 20

a) Confirmed. 21

22

b) Hydro One has followed the OEB methodology in the OEB’s workform, Hydro One inputted 23

the useful life of poles at 55 years found in Exhibit C1-06-01, Attachment 1 page 22. Hydro 24

One did not use a useful life of 60 years previously. 25

26

c) Please refer to I-54-Rogers-S2 Q1 d). However, for the benefit of the Board and the parties, 27

Hydro One can advise that it did not make any evidentiary submissions that could assist with 28

this interrogatory. 29

30

d) Changes to Hydro One’s pole replacement program that impact the expected useful service 31

life of poles, may impact depreciation rates. Hydro One would need to engage its external 32

depreciation consultant, Foster Associates, to review the program changes and assess any 33

impact on rates. 34

35

e) – g) Please refer to I-54-Rogers-S2 Q1 d). 36

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S5

Page 1 of 2

Witness: BOLDT John


2

Issue: 3



6

Reference: 7

Supplemental Explanation of Pole Attachment Rate Calculations, page 2 8

HONI_SUB_Pole Attachment Workform_20180528, Tab Appendix Provincial Rate. 9

10

Interrogatory: 11

Preamble: 12

13

In Section 6.0 of the Supplemental Evidence, Hydro One provided the calculation of Capital 14

Carrying Cost of $96.66: 15

16

6.0 Capital Carrying Cost of $96.66 = 2018 Forecasted Net Embedded Cost as calculated in 17

Line 3 above ($1,290.58) * 2018 Before Tax Weighted Average Cost of Capital (WACC) 18

(7.49%) 19

20

a) Please provide the breakdown of the calculation of the pre-tax WACC, and a comparison of 21

the changes in the pre-tax WACC for the bridge and test years. 22

23

b) Why is Hydro One’s pre tax WACC higher than the WACC of other utilities that participated 24

in the pole attachment consultation? (Please reference File: HONI_SUB_Pole Attachment 25

Workform_20180528, Tab Appendix Provincial Rate) 26

27

c) Does Hydro One anticipate this rate decreasing or increasing significantly in the next five 28

years or remaining approximately the same? 29

30

Response: 31

a) The pre-tax WACC is calculated as follows: 32

Pre-tax WACC = (Target Long Term Debt Ratio * Medium & Long Term Borrowing Rate) 33

+ (Target Short Term Debt Ratio * Short Term Borrowing Rate) + (Target Equity Ratio * 34

Target Before Tax Return on Equity) 35

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S5

Page 2 of 2

Witness: BOLDT John

The rates below, also filed in EB-2017-0049, Exhibit Q, Tab 1, Schedule 1, Section 1.3, Table 8, 1

show the Hydro One rates for 2018: 2

3

Distribution WACC 2017 2018

Rates

Short term borrowing rate 1.76% 2.29%

Medium & Long Term Borrowing Rate 4.43% 4.47%

Allowed Return on Equity 8.78% 9.00%

Capital structure

Target Short-term debt ratio 4.00% 4.00%

Target Long-term debt ratio 56.00% 56.00%

Preferred shares 0.00% 0.00%

Target Equity Ratio 40.00% 40.00%

Proxy Income Tax Rate 26.50% 26.50%

Pre-tax WACC 7.33% 7.49%

4

The 2018 target pre-tax Return on Equity is calculated as follows: Allowed Return on Equity/(1-5

Proxy Income Tax Rate) = 9.00%/(1-26.50%) = 9.00%/73.50% = 12.24%. 6

7

Therefore, the 2018 pre-tax WACC = (56% * 4.47%) + (4% * 2.29%) + (40% * 12.24%) 8

= 2.5032% + 0.0916% + 4.896% 9

= 7.49% 10

11

b) Hydro One is unable to answer this question as we don’t have the data that was used to 12

compute the other utilities’ pre-tax WACC. 13

14

c) To determine the Joint Use Telecom Charge (Rate Code 30) over the application period, the 15

2018 WACC rate is used to determine the 2018 charge. The 2018 charge is then inflated 16

annually by the projected Implicit Price Index. 17

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S6

Page 1 of 2

Witness: BOLDT John


2

Issue: 3



6

Reference: 7


Updated Evidence: 2017-06-07, Exhibit H1, Tab 2, Schedule 4, page 103 9

10

Interrogatory: 11

Preamble: 12

13

In Section 5.0 of the Supplemental Evidence, Hydro One provided Pole Maintenance Cost of 14

$7.25: 15

16

5.0 Pole Maintenance Costs of $7.25 17

18

= [USoA 5120, as stated in G1-03-01, Attachment 3, Sheet I3 Trial Balance Data, Cell H392 19

($23,422,812.70)/ Qty. of Poles Extrapolated for 2018 (1,566,272) = $14.95]*Allocation to 20

Third Parties Determined by OEB (48.50%) = $7.25 21

22

and 23

24

Updated Evidence: 2017-06-07, Exhibit H1, Tab 2, Schedule 3, page 104 Hydro One provided: 25

26

3. 2016 Pole Maintenance Costs of $4.08 27

28

Lines Maintenance 29

30

USofA 5120: Maintenance of Poles, Towers and Fixtures 31

32

Sub Account 1464 - Trouble Calls ($14.14M) + Subaccount 1467 - OM&A Cost Storm 33

Response ($1.56M) + Subaccount 1469 - Defect Corrections ($1.34M) = $17.04M 34

$17.04M x 5% (5% of the time work is pole related) = $0.85M 35

36

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S6

Page 2 of 2

Witness: BOLDT John

a) Why has account 5120 increased from $17.04 M to $23.4 M, a 37% increase in less than 2 1

years? 2

3

b) Please confirm whether the costs in subaccount 1464 as filed represent the breakdown of 4

costs in account 5120. 5

6

c) Does Hydro One have any indication that this account will keep increasing at this rate over 7

the next 5 years? 8

9

d) In its May 28, 2018 supplemental explanation of evidence, Hydro One has used an allocation 10

factor of 48.5% (as determined by OEB1) of account 5120 rather than 5% as per updated 11

evidence filed on June 7, 2017. In Hydro One’s view, does the 48.5% represent a more 12

accurate allocation for pole maintenance attributed to communication carriers for its pole 13

population? 14

15

e) Going forward, could Hydro One break out maintenance costs by sub account for joint-use 16

poles only? 17

18

Response: 19

a) USoA 5120 has not increased by 37%. The $17.04M filed in Exhibit H1-02-03, page 103 is 20

made up of only certain subaccounts, as further stated in H1-02-03, page 104 of 112. In 21

following the OEB’s methodology, the $23.04M filed in Hydro One’s Supplemental 22

Explanation, is the forecasted 2018 year-end balance of USoA 5120. 23

24

b) A portion of subaccount 1464 is allocated to USoA 5120, and for 2016, that portion is shown 25

in Exhibit H1-02-03, page 104 of 112. 26

27

c) The rate of increase calculated in a) is not accurate. Please refer to a) above. 28

29

d) Hydro One has applied the OEB’s methodology and pole maintenance cost allocation factor 30

for determining the telecom Joint Use rate. 31

32

e) Yes, it could be possible. 33

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S7

Page 1 of 2


2

Issue: 3



6

Reference: 7


Evidence Updated: 2017-06-07, Exhibit H1, Tab 2, Schedule 4, page 103 9

10

Interrogatory: 11

Preamble: 12

13

In Section 7.0 of the Supplemental Explanation page 2, Hydro One provided the calculation of 14

the Average Number of Attachers Per Pole. 15

16

Average Number of Attachers Per Pole = (2018 Total Number of Permitted Poles for All 17

Attachers /Qty. of Joint Use Poles Extrapolated for 2018) = 726,240/537,719 = 1.35 18

19

a) Based on Hydro One’s proposed pole replacement program and planned mergers and 20

acquisitions of utilities, does Hydro One project the count to increase or decrease in the 21

upcoming 5 years or remain relatively stable? 22

23

b) If Hydro One is predicting a change in the count going forward, please provide a range. 24

25

Response: 26

a) When the three acquired utilities are integrated into Hydro One, the average number of 27

attachers per pole will remain relatively stable. 28

29

b) The three acquired utilities would result in an increase from 1.35 to 1.37 Average Number of 30

Attachers Per Pole. 31

32

Average Number of Attachers Per Pole = (2018 Total Number of Permitted Poles for All 33

Attachers, including three acquired utilities /Qty. of Joint Use Poles Extrapolated for 2018, 34

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule Staff-S7

Page 2 of 2

Witness: BOLDT John

including three acquired utilities) = (726,240+18,9161)/(537,719+5,811

2) = 745,156/543,530 1

= 1.37 2

1 I-42-VECC-58 shows the number of telecom attachments being integrated from the acquired LDCs. I-42-VECC-63 shows the

number of streetlight attachments being integrated from the acquired LDCs. 2 Poles integrated from acquired utilities: Norfolk Power – 3,072, Haldimand Hydro – 1,347, Woodstock Hydro – 1,392.

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S130

Page 1 of 2

Witness: BOLDT John

Vulnerable Energy Consumers Coalition Interrogatory #S130 1

2

Issue: 3



6

Reference: 7

HONI’s Reply to Procedural Order No. 6, Supplemental Explanation of Pole Attachment 8

Rate Calculations, page 1 9

HONI Pole Attachment Work Form, Tab 3 (Direct Costs) 10

11

Interrogatory: 12

a) With respect to Tab 3 of the Pole Attachment Work Form, please provide the 2017 actual 13

costs for GIS Tracking (Joint Use Database Maintenance) and provide a breakdown as 14

between: i) enhancement costs and ii) annual maintenance costs in the same level of 15

detail as shown under Item #1 on page 1 for 2018. 16

17

b) With respect to Item #1 on page 1, what is the basis for the 50 hours used to determine 18

the annual maintenance costs for 2018 and what were the actual hours for 2017? 19

20

c) Please provide the basis for the $181/hour rate used for 2018, including a schedule 21

showing the components of the rate. 22

23

d) Please describe the actual Joint Use Database enhancements performed in 2017 and those 24

planned for 2018. 25

26

e) What were the annual enhancement costs for the Joint Use Database for 2013-2016? 27

28

f) What were the actual number of annual maintenance hours and the resulting annual costs 29

for the Joint Use Database for 2013-2016? 30

31

Response: 32

a) i) There were no enhancement costs in 2017. 33

ii) Annual maintenance costs = 50 hours x $180/hour1 = $9,000 34

35

1 This is the fully burdened labour rate for 2017. In 2018, the fully burdened labour rate increased to $181/hour.

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S130

Page 2 of 2

Witness: BOLDT John

b) The 50 hours are for ongoing maintenance to the database system that is used to track billing 1

information for joint use partners, and create, maintain and supersede permits. It is a web-2

based application used to track all executed joint use agreements. The actual hours for 2017 3

were 50 hours, as shown in 1. a) above. The maintenance team allocates approximately one 4

hour every week for Joint Use database maintenance. They address a number of issues 5

including: breaks in the code where the system goes down, permit applications which did not 6

upload properly, server maintenance, billing assistance for the joint use database billing 7

system. 8

9

c) This is a fully burdened labour rate for the staff performing Joint Use Database enhancement 10

work in 2018. The components of fully burdened labour rates are described in Exhibit C1-03-11

01-01. 12

13

d) There were no enhancements to the database in 2017. Enhancements completed in 2018 were 14

to provide new options for telecommunication companies in regards to standard deviations. 15

The specific items were: 16

i) Ability for Hydro One technicians to input the poles which have these deviations. 17

ii) Additional reports which can be run to provide the updates to the Electrical Safety 18

Authority for these deviations. 19

iii) Changes to all forms on the Joint Use Database to show the deviations to the users2. 20

iv) Added an additional search field in the Joint Use Database for the users to find permits by 21

streets. 22

23

e) The only enhancement was undertaken in 2016, at a cost of $22,400. 24

25

f) In the years 2013-2016, 50 hours has consistently been allocated to maintenance of the Joint 26

Use database, at that year’s appropriate labour rate. 27

2 The user of the form is primarily a technician, but the form may also be used by the Joint Use team or other employees inside

Hydro One

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S131

Page 1 of 2

Witness: BOLDT John


2

Issue: 3


2022 period reasonable?5

6

Reference: 7




11

Interrogatory: 12

a) With respect to Item #1 on page 1, what activities are included under Joint Use Staff 13

Specific Labour? In responding please confirm whether or not the activities include 14

issuance and management of permits, invoices and back office support activities. Please 15

also confirm whether these activities are associated just with telecom attachers or with all 16

third party attachers. 17

18

b) How was the forecast cost of $1,109,258.50 determined? 19

20

c) Please provide the annual Joint Use Staff Specific Labour costs for 2013-2017. 21

22

d) How were actual costs for each year determined? 23

24

Response: 25

a) The labour that has been submitted is the labour associated to the overall provincial Joint Use 26

program. The team monitors agreements, creates memos, resolves disputes, trains staff, 27

monitors permits, issues invoices, monitors accounts receivables, performs Regulation 22/04 28

audits, works with joint use standards, distribution rate filings and writes and negotiates new 29

agreements. These activities are associated with all attachers. Please also see I-54-Staff-30

S2(c). 31

32

b) $1,109,258.50 is the labour cost that will be incurred in 2018 by the provincial Joint Use 33

team at Hydro One. 34

35

36

37

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S131

Page 2 of 2

Witness: BOLDT John

c) 1

Year Joint Use Staff Specific Labour Cost

2013 $1,026,373

2014 $1,080,772

2015 $1,114,082

2016 $1,242,163

2017 $1,151,190

2

d) These are the annual labour costs incurred by the provincial Joint Use team at Hydro One. 3

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S132

Page 1 of 1

Witness: BOLDT John


2

Issue: 3



6

Reference: 7




EB-2015-0304: Report of the Ontario Energy Board –Wireline Pole Attachment Charges 11

12

Interrogatory: 13

a) With respect to the Pole Attachment Working Group the OEB constituted to provide 14

input into the EB-2015-0304 Report, did HONI provide any data regarding historic 15

Administration Costs? 16

17

b) If yes, please provide the data and reconcile it with the historic data provided in response 18

to VECC 130 and VECC 131. 19

20

Response: 21

a) No. 22

23

b) Please see I-54-Rogers-S2 Q1 (d). 24

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S133

Page 1 of 2

Witness: BOLDT John


2

Issue: 3



6

Reference: 7




11

Interrogatory: 12

a) With respect to Item #2 on page 1, please explain what DOMC and RLM stand for and 13

what the roles of each are in responding to trouble calls dispatched on behalf of telecom 14

carriers. 15

16

b) Do the trouble calls dispatched on behalf of telecom carriers include incidents related to 17

wires down, trees on wires and low wires? If not, what types of incidents are excluded 18

and why? 19

20

c) What other types of incidents could lead to trouble calls dispatched on behalf of telecom 21

carriers? 22

23

d) Please explain the basis for each of the “rates” used in the table and provide a schedule 24

setting out the components of each rate. 25

26

e) Please explain why the regular hour rates are materially lower than the rate used in the 27

determination of the annual maintenance costs for the Joint Use Database. 28

29

f) Please provide a table similar to that provided under Item #2, Tab 2 but using 2016 hours 30

data and 2018 labour dollars. 31

32

Response: 33

a) DOMC stands for Distribution Operations Maintenance Centre. The staff in the DOMC will 34

retrieve trouble calls from the customers, and dispatch the crews to address the trouble call. 35

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S133

Page 2 of 2

Witness: BOLDT John

RLM stands for Regional Line Maintainers. They are the workers that respond to the trouble 1

call. 2

3

b) Yes. 4

5

c) Hydro One responds to any trouble calls related to a telecom related asset that is relayed to us 6

from an Ontario resident or a first responder. Hydro One does not have the ability to 7

determine if it is only telecom related at the time that the call is received. To positively 8

identify, a trouble truck is dispatched to the location, and if hazardous, the Hydro One crew 9

will control the hazard for the safety of the public and notify the appropriate carriers. 10

11

d) The composition of the rates is described in C1-03-01, Attachment 1 for labour rates, and 12

C1-03-01, Attachment 2 for fleet rates. 13

14

e) Different staff with a different labour rate performs the annual maintenance costs for the 15

Joint Use Database. 16

17

f) Below is the requested information. Note, Hydro One received fewer trouble calls in respect 18

of telecom assets in 2016 than in 2017. 19

20

21

22

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S134

Page 1 of 2

Witness: BOLDT John


2

Issue: 3



6

Reference: 7




11

Interrogatory: 12

a) With respect to the Table under Item #2 on page 1, please confirm that the table only 13

includes trouble calls dispatched that involved telecom carriers’ facilities. 14

15

b) If confirmed in part (a), would there have been other trouble calls dispatched that were 16

related to lines/equipment owned by other 3rd

party attachers? 17

18

c) Please explain why, if the trouble call volumes are based on trouble calls associated only 19

with telecom carriers’ facilities, the cost per pole for Trouble Calls (i.e., $3.20) is 20

calculated using the total number of 3rd

party attachers per pole as opposed to just the 21

number of telecom carrier attachers per pole. 22

23

Response: 24

a) Confirmed. 25

26

b) Yes, Hydro One does dispatch trouble calls related to lines and equipment owned by other 3rd

27

party attachers. The times associated with these trouble calls are not included in the Table 28

under Item #2 on page 1. 29

30

c) In accordance with the OEB workform, we used the total joint use poles and the associated 31

allocation factor to determine the Loss of Productivity rate. 32

33

Correction to Supplemental Evidence 34

In Hydro One’s submission on May 28, 2018, we submitted that the Total Cost of Wires 35

Down that Hydro One incurred on behalf of telecom carriers was $2,321,078.13, and that 36

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S134

Page 2 of 2

Witness: BOLDT John

was calculated based on 2017 trouble call data. Our submission stated that we applied 2018 1

labour rates to determine the amount. In error, 2017 labour rates were used in that 2

calculation. 3

4

Using the 2018 labour rates, with the 2017 trouble call data, the Total Cost of Wires Down 5

amount comes to $2,336,836.55. This would increase the Total Loss of Productivity, per 6

pole, per attacher by two cents, to $3.22, and would also increase the 2018 pole attachment 7

charge by two cents from $47.67 to $47.69. 8

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S135

Page 1 of 1

Witness: BOLDT John


2

Issue: 3



6

Reference: 7




11

Interrogatory: 12

a) Are there any other activities that HON undertakes specifically on behalf of telecom 13

carriers that are classified as OM&A as opposed to capital expense? 14

15

b) Are there any other OM&A-related activities that HON performs on its own distribution 16

assets where there are incremental costs directly as a result of the existence of telecom 17

attachers? If so, what are they and what are the estimated incremental costs for 2017? 18

19

Response: 20

a) In the OEB’s decision, the OEB did not include costs for primary neutrals, copper down 21

grounds and grounding rods, which Carriers bond/connect to based on CSA standards. Hydro 22

One has not submitted them following the OEB approved work form. 23

24

b) No. 25

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S136

Page 1 of 4

Witness: BOLDT John


2

Issue: 3



6

Reference: 7


Rate Calculations, pages 1-2 9

HONI Pole Attachment Work Form, Tab 2 (Attacher and Pole Data) 10

11

Interrogatory: 12

a) Please provide data similar to that in Tab 2 (Tables 1, 2 and 3) for each of the years 2013-13

2016. 14

15

b) With respect to footnote 1 on page 1, please provide the calculations supporting the 16

assumed average increase of 12,227 in Joint Use Poles per year and the assumed average 17

annual increase of 1,644 in Total Poles per year. 18

19

c) With respect to Table 1 in Tab 2, please confirm that the volumes represent the number 20

of attachers and not the number of attachments on HONI poles. If not, please provide a 21

revised Tables 1 and 3 for 2013-2018 based on the number of attachers. 22

23

d) With respect to Table 1 in Tab 2, are the volumes for non-telecom attachers based on: i) 24

the number of attachers regardless of whether or not the pole concerned has a telecom 25

attacher or ii) the number of attachers on poles that also have a telecom attacher? 26

27

e) If Table 1 in Tab 2 sets out the number of non-telecom attachers on all HONI poles 28

regardless of whether or not there is a telecom attacher (i.e., case (i)), please provide a 29

revised Table 1 based on case (ii) that sets out the values for 2013-2017. (Note: Please 30

also ensure the tables reflect attachers and not attachments). 31

32

f) With respect to Table 1 in Tab 2, please clarify whether: i) there are no traffic lights 33

attached to HONI poles; ii) there are traffic light attachers but they are included under 34

street lighting or iii) there are traffic lights attached but no “charge” is levied. 35

If case (i), please reconcile with the response to EB-2015-0141, Exhibit I, Tab 4, 36

Schedule 1 c) which indicates that HONI has agreements with municipalities 37

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S136

Page 2 of 4

Witness: BOLDT John

regarding traffic light attachments. 1

If case (ii), please reconcile the number reported for 2017 of 77,341 with the 2015 2

value of 101,859 reported in EB-2015-0141, Exhibit I, Tab 4, Schedule 1 d). 3

Also, please separate out the number of street lights vs. traffic lights for 2013-4

2018 5

If case (iii) please reconcile with the response to EB-2015-0141, Exhibit I, Tab 4, 6

Schedule 1 c) which indicates that HONI has agreements that set the rate at $2.04 7

per year. Also, please provide the number of traffic light attachers for 2013-2018. 8

9

g) With respect to Table 1 in Tab 2, does the row “LDC Generator” include both LDC 10

power attachers as well as Generator power attachers? If yes, please provide a 11

breakdown. If not please explain where each of these two types of attachers are 12

accounted for in Table 1. 13

14

h) With respect to Table 1 in Tab 2, please break the 302,268 telecom attachers/attachments 15

reported for 2017 down into the various categories used in the response to EB-2015-16

0141, Exhibit JT3 (i.e., Full Telecom, Telecom Service and Bell MEU). If Telecom 17

Service Poles or Bell MEU poles are not included in Table 1 please: i) explain why not; 18

ii) indicate the number of such attachments for 2017; and iii) indicate the current rate 19

paid. 20

21

i) Are there any other third party attachers to HONI’s poles that have not been included in 22

Table 1? If so please indicate: i) who they are; ii) the volumes in 2017 (based on 23

attachers not attachments) and iii) the rate paid (if any). 24

25

Response: 26

a) Hydro One began tracking data at this level beginning in 2016. Please see below for the data 27

in Tab 2, Tables 1 through 3 for 2016. See also in I-54-Staff-260(b) which includes similar 28

information for attacher data only. 29

30

Type of Attacher 2016 Actual Volumes

Telecom Attacher 300,126

Bell Canada 331,238

Streetlights 83,238

LDC & Generators 15,176

Total 729,778

31

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S136

Page 3 of 4

Witness: BOLDT John

b) Please see the tables below as well as I-54-Rogers-S04: 1

2

3

4

5

c) Confirmed. 6

7

d) Confirmed that i) is correct, the numbers in Table 1 reflect the number of attachers regardless 8

of whether or not the pole concerned has a telecom attacher. 9

10

e) Please see I-54-Rogers-S2 Q1 (d). 11

12

f) Confirmed that ii) is correct. There was an internal audit on streetlights performed to confirm 13

the number of lights being billed to municipalities, and the number was corrected in 2017. 14

We do not track streetlights separately from traffic lights. 15

16

g) LDCs are attached to 10,144 poles for power space, and Generators are attached to 4,123 17

poles for power space. 18

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S136

Page 4 of 4

Witness: BOLDT John

h) Please see I-54-Rogers-S2 Q1 (d). 1

2

i) No. 3

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S137

Page 1 of 1

Witness: BOLDT John


2

Issue: 3



6

Reference: 7




11

Interrogatory: 12

a) With respect to Table 2 in Tab 2, are the volumes shown for Joint Use Poles based on: i) 13

the number of joint use poles regardless of whether or not the pole concerned has a 14

telecom attacher or ii) the number of joint use poles that have a telecom attacher? 15

16

b) If Table 2 in Tab 2 sets out the number of joint use poles regardless of whether or not 17

there is a telecom attacher (i.e., case (i)), please provide revised Joint Use Pole data per 18

Table 2 based on case (ii) for each year 2013-2017. 19

20

Response: 21

a) The volumes shown for Joint Use poles are based on i) the number of joint use poles 22

regardless of whether or not the pole concerned has a telecom attacher. 23

24


Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S138

Page 1 of 1

Witness: BOLDT John


2

Issue: 3



6

Reference: 7



HONI Pole Attachment Work Form, Tab 4-a (Power Deduction Factor) 10

11

Interrogatory: 12

a) Did HONI attempt to complete Tab 10 a) in Tab 4-a based on HONI’s information? If 13

not, why not? 14

15

b) If yes, please provide the results. 16

17

Response: 18

a) HONI did not attempt to complete Table 10 in Tab 4-a because HONI already showed the 19

derivation of the 15% during the Pole Attachment Working Group (“PAWG”) meetings, and 20

accepts the OEB’s direction at 15% to remove power related fixtures. Please see the 21

instructions at the top of Tab 4a) which state: “Instructions: If a change to the default 22

allocation of 15% power deduction is proposed, please complete Table 10-a”. 23

24

b) N/A 25

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S139

Page 1 of 1

Witness: BOLDT John


2

Issue: 3



6

Reference: 7


Rate Calculations, page 2, Item 4 9

HONI Pole Attachment Work Form, Tab 4 (Indirect Costs) 10

Exhibit D2, Tab 1, Schedule 1, Attachment 1, page 5 11

12

Interrogatory: 13

a) Please provide the derivation of the $54 M depreciation expense shown for Account 1830 14

for 2018 (per Exhibit D2., Tab 1, Schedule 1, Attachment 1) and, in doing so, show the 15

depreciation rate used. 16

17

b) What was the applicable depreciation rate for Account 1830 for each of the years 2013-18

2017? 19

20

Response: 21

a) The 2018 forecasted depreciation expense was derived below, using the half-year rule for 22

additions and disposals to the asset base. 23

24

2018 YE Asset Base $ 3,200.7

x Depreciation rate 1.70%

Depreciation Expense $ 54.4

25

b) The depreciation rate for Account 1830 was1: 26

a. 2013-2014: 1.83% 27

b. 2015-2017: 1.7% 28

1 EB-2013-0416 C1-06-01 Attachment 1 page 22.

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S140

Page 1 of 3

Witness: BOLDT John


2

Issue: 3



6

Reference: 7



HONI Pole Attachment Work Form, Tab 1 (Summary Tab) 10

11

Interrogatory: 12

a) Please provide the derivation of the 2018 Before Tax Weighted Average Cost of Capital 13

(7.49%) including references to where in the Application the various inputs used can be 14

found. 15

16

b) What was HONI’s 2017 Before Tax Weighted Average Cost of Capital based on its 17

actual 2017 cost of debt, the Board’s approved return on equity for 2017 and the Board’s 18

approved capital structure. Please provide the derivation. 19

20

c) HONI is proposing to update its cost of capital calculation in 2021. Does HONI plan to 21

revise the Pole Attachment Charge calculation in 2021 to reflect the updated value for the 22

Before Tax Weighted Average Cost of Capital? 23

24

Response: 25

a) The pre-tax WACC is calculated as follows: 26

Pre-tax WACC = (Target Long Term Debt Ratio * Medium & Long Term Borrowing Rate) 27

+ (Target Short Term Debt Ratio * Short Term Borrowing Rate) + (Target Equity Ratio * 28

Target Before Tax Return on Equity) 29

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S140

Page 2 of 3

Witness: BOLDT John

The rates below, also filed in EB-2017-0049, Exhibit Q, Tab 1, Schedule 1, Section 1.3, Table 8, 1

show the Hydro One rates for 2018: 2

3

Distribution WACC 2017 2018

Rates

Short term borrowing rate 1.76% 2.29%

Medium & Long Term Borrowing Rate 4.43% 4.47%

Allowed Return on Equity 8.78% 9.00%

Capital structure

Target Short-term debt ratio 4.00% 4.00%

Target Long-term debt ratio 56.00% 56.00%

Preferred shares 0.00% 0.00%

Target Equity Ratio 40.00% 40.00%

Proxy Income Tax Rate 26.50% 26.50%

Pre-tax WACC 7.33% 7.49%

4

The 2018 target pre-tax Return on Equity is calculated as follows: Allowed Return on Equity/(1-5

Proxy Income Tax Rate) = 9.00%/(1-26.50%) = 9.00%/73.50% = 12.24%. 6

7

Therefore, the 2018 pre-tax WACC = (56% * 4.47%) + (4% * 2.29%) + (40% * 12.24%) 8

= 2.5032% + 0.0916% + 4.896% 9

= 7.49% 10

11

See also I-54-Staff-S5(a). 12

13

b) The 2017 Before Tax Weighted Average Cost of Capital was 7.33%. Please see below for the 14

derivation. 15

Distribution WACC 2017

Rates

Short term borrowing rate 1.76%

Medium & Long Term Borrowing Rate 4.43%

Allowed Return on Equity 8.78%

Capital structure

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S140

Page 3 of 3

Witness: BOLDT John

Target Short-term debt ratio 4.00%

Target Long-term debt ratio 56.00%

Preferred shares 0.00%

Target Equity Ratio 40.00%

Proxy Income Tax Rate 26.50%

1

As shown in I-54-Staff-S5(a), the pre-tax WACC is calculated as follows: 2

Pre-tax WACC = (Target Long Term Debt Ratio * Medium & Long Term Borrowing Rate) + 3

(Target Short Term Debt Ratio * Short Term Borrowing Rate) + (Target Equity Ratio * Target 4

Before Tax Return on Equity) 5

6

The Target Before Tax Return on Equity is calculated as follows: 7

Allowed Return on Equity/(1-Proxy Income Tax Rate) = 8.78%/(1-26.50%) = 8.78%/73.50% = 8

11.95%. 9

10

Therefore, the pre-tax WACC is: = (56% * 4.43%) + (4% * 1.76%) + (40% * 11.95%) 11

= 2.4808% + 0.0704% + 4.776% 12

= 7.33% 13

14

c) No. Hydro One’s submissions request to use the 2018 WACC rate to determine the 2018 15

charge and then to inflate the 2018 charge annually by the projected Implicit Price Index. 16

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S141

Page 1 of 1

Witness: BOLDT John


2

Issue: 3



6

Reference: 7




11

Interrogatory: 12

a) Are all of the attachers shown in Table 1 (Tab 2) located in the telecom 13

(communications) space? If not, please provide a schedule setting out, for 2017, the 14

number of each type of attacher located in the telecom space. Please also confirm the 15

location of the balance of the attachers. 16

17

Response: 18

a) No. 19

20

Only telecom attachers are located in the telecom space. There are 633,506 attachers in the 21

telecom space. 22

23

The LDCs and generator attachers are located in the power space. The streetlight attachers 24

are located above the telecom space. 25

Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S142

Page 1 of 1

Witness: BOLDT John


2

Issue: 3



6

Reference: 7




EB-2015-0304: Report of the Ontario Energy Board –Wireline Pole Attachment Charges, 11

pages 32-33 12

13

Interrogatory: 14

Preamble: 15

16

The Board Report’s discussion of Nordicity’s “hybrid methodology” assumes that all third 17

party attachers are located in the communications space. This is evidenced by the fact the 18

discussion assumes space related directly to third party attachers is the 2 feet of 19

communications space plus the 3.25 feet of separation space. 20

21

a) Does HONI accept the premise set out in the above Preamble? If not, why not? 22

23

b) Please recalculate the allocation factor where the portion of the space attributable to 24

communication space users (i.e., 100% of the communications and separation space plus 25

50% of the common space) is divided by the number of attachers per pole in the 26

communications space. 27

28

Response: 29

a) Please see I-54-Rogers-S2 Q1 (d). 30

31


Filed: 2018-08-23

EB-2017-0049

Exhibit I

Tab 54

Schedule VECC-S143

Page 1 of 1

Witness: BOLDT John


2

Issue: 3



6

Reference: 7

HONI’s Reply to Procedural Order No. 6, Explanation of Pole Attachment Rate Calculations, 8

page 3 9

10

Interrogatory: 11

a) Please confirm that HONI is requesting the OEB to approve (on a final basis) the 2019-12

2022 Pole Attachment Charges set out on page 3. If not, what is HONI’s proposal 13

regarding the determination and approval of the Pole Attachment Charges for 2019-14

2022? 15

16

b) Why isn’t HONI requesting that the 2019-2022 Charges be determined by applying the 17

annual IPI value as approved by the Board? 18

19

Response: 20

a) Yes. 21

22

b) HONI is projecting the rate for 2019-2022 based on forecasted IPI to offer the 23

telecommunications companies the ability to forecast their future expenses. 24

by cou - oeb

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